India Infoline has come out with research report on Jyothy Laboratories IPO. The firm has recommended subscribing to the issue.
Jyothy Laboratories has opened for subscription with an initial public offering (IPO) of 44.30 lakh shares of Rs 5 each at a price band between Rs 620 and Rs 690 per equity share.
The company will raise Rs 274 at lower price band and Rs 305.6 crore at higher end of price band. The issue will close on November 27, 2007.
India Infoline report on Jyothy Laboratories IPO
Jyothy Laboratories (JLL) is an FMCG company making a range of branded products, including fabric whiteners, mosquito repellents, dish-washing soaps, soaps and incense. Its key brands are Ujala, Maxo, Exo, Jeeva and Maya.
Investment summary
* Ujala is a well-known brand of fabric whitener, with dominant market share of approximately 72% in the category
* Local presence and wide distribution reach
* Targets the rural market
* Entering into new joint-venture initiatives
Risks and concerns
* Heavily depend on two biggest brands, Ujala and Maxo which contribute 43.6% and 35.4% of its total sales respectively (as on 30 June 2007).
* Dependence on outsourced production through third parties. Any disputes or disagreements may affect their business.
* The company is susceptible to seasonal variations in demand for its products.
Valuations attractive in comparison to the peer group
At the issue price of Rs 620-690, JLL commands an inexpensive P/E (on relative basis) of 18.6x-20.7x based on FY07 EPS of Rs 33.3. The price/book ratio of 3.4x at Rs 690 is also at steep discount to peers. The company is well-placed for healthy growth, given its well-established brand equity, leadership in the fabric whitener segment and strategic alliances. We recommend to Subscribe in the issue.
Source: Moneycontrol.com
Friday, November 23, 2007
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